The changing roles of original equipment manufacturers (OEMs) and maintenance, repair and overhaul providers (MROs) in the aftermarket are cause for concern to some industry observers, but no one denies an evolution is under way.
Mark Hayman, director of engineering for Hong Kong Aircraft Engineering Co. (Haeco), which has joint ventures with various OEMs in the Asia-Pacific region, says more OEM involvement in the aftermarket is a natural progression from the start of airline maintenance outsourcing to third parties.
He told MRO Asia Conference attendees in Singapore Nov. 15 that they should look at the evolution of the car market. Companies used to buy a fleet of the same cars, but it evolved to where leasing companies like Hertz and Avis now manage the process and no longer charge by the mile. “Look at what other industries are doing, and it’s clear where we are going,” he says.
“OEMs have the intellectual property,” but “MROs have the local knowledge and can execute,” says Hayman. He argues this makes for a complementary relationship, as long as both deliver better on-wing reliability and maximize asset value for customers. “It’s about changing contracts” to incentivize desired activities and performance, he says.
Herve Alexandre, VP-technical procurement forIndustries/ E&M, sees some OEMs being overly aggressive and using unfair practices in the market to gain market share, which drives up costs. He also sees some OEMs bringing value, noting that “each is different.”
Alexandre spends $2 billion annually on parts, with $1 billion going to 15 OEM suppliers, or 1% of his 1,500 suppliers. “This pressure in the aftermarket is a real concern,” he says.
Bothand say customers have asked them to be more involved in supporting their aircraft, so they need to offer more aftermarket service options. Both also point out they rely on partners to help them support their growing fleets.
Pierre Reville, VP-Airbus customer support, thinks the trend of airlines asking for aftermarket services will increase, partly because OEMs have the intellectual property to be able to drive a high reliability rate—and be accountable for achieving them.
J.J. Gibson, services marketing leader for Boeing Commercial Aviation Services, adds that its support solutions are not offered in one-size-fits-all packages. Customers choose which services they want, but Boeing needs to offer many from which to choose.
“We feel like we have a pretty good services portfolio,” he says, but “we would look at acquisitions where they make sense” to serve customers.
In terms of costs, some MRO providers and airlines point out OEM solutions are more expensive and do not take into account local labor and service costs.
“We respect market conditions and do not win by being the most expensive,” says Reville. “Teaming and choice are key.”